OBJECTIVES: To evaluate the impact of including paliperidone ER in the Brazilian Public Health Care System, using a health economic evaluation in comparison to the novel atypical agents that are included in the schizophrenia guidelines (olanzapine, quetiapine, ziprasidone). METHODS: A decision tree model was developed describing the clinical evolution of patients with acute exacerbation of schizophrenia during a one year period. Published medical literature, unpublished clinical trial, database information and a clinical expert panel populated the model. All unit costs represent costs for the public HC system (SUS). Outcomes included percentage of patients discontinuing, days without therapy, percentage, number and duration of relapses and direct medical costs. RESULTS: Long-term effectiveness (number of stable days) of paliperidone ER (280) was similar to olanzapine (279) and better than ziprasidone (272) and quetiapine (267). Paliperidone ER was the treatment arm with lower annual costs per patient (US$2628), followed by ziprasidone (US$2655), olanzapine (US$2899) and quetiapine (US$3253), respectively. Almost half of the treatment cost is due to hospitalization, followed by medication cost, day hospital, mental health clinic, social/group therapy visit, physician visit and emergency room visit. CONCLUSIONS: Due to its well-balanced efficacy-safety profile, the long term effectiveness of paliperidone ER matched that of olanzapine and is better than ziprasidone and quetiapine over the one year period. Moreover, paliperidone ER was also the alternative with the lowest treatment and overall costs for the public health system. As such, including paliperidone ER in the Brazilian Public Health System has the potential to further improve outcomes for patients with schizophrenia while reducing public expenditures.